Key Elements to the Marketing Plan: Setting and Allocating the Budget
In order to create a comprehensive marketing plan, you need to incorporate certain key elements. Once you have determined your goals and objectives, you then develop strategies to achieve them. Having done this, you can assign responsibility and set time lines for tasks to be completed. The next step of the process is setting and allocating a budget.This allows you to align your financial resources with your overall plan.
There are several ways to determine an appropriate budget that provides a cost effective way to market your business. One way is to allocate a certain percent of your sales towards your media and promotional plan. This method allows for increased spending as your overall sales volume grows. As long as there is profitable sales growth, this approach makes sense. Another way is to institute a “cents per unit sold” budget. For example, if you sell 100,000 boxes of product, and you allocate .10 per box, you would have a $10,000 marketing budget. If you have a set margin per unit, this is a good approach to use. For smaller companies another way to determine a budget is to use a monthly figure based on available cash flow. This will give you better control of your spending, however you must still allocate enough money to support the marketing effort. Whatever method you use to set the budget, it is important that you allocate a realistic amount that enables proper execution of the plan’s strategies.
Once you have a total budget, you need to determine how much is going to be spent on media (i.e. print, radio, direct mail) and how much on promotion (i.e. samplings, special events, customer entertainment). This will largely depend on the particular business you are in. The main idea is to develop a mix that allows you to allocate resources for the activities that will be most effective in growing your sales. Understanding your product and the marketplace you compete in will make this process easier to implement.
An important part of the budget process, is to build in ways to maximize the money spent. If you are buying radio, negotiate additional promotional value that ties your product or service into their on-air activities. Form “trade for mention” opportunities with all your media partners. Develop cross promotional programs with complimentary products and services. There are numerous ways to leverage the money you currently spend. By doing this on a consistent basis you will stretch your marketing dollars.
Setting and properly allocating a budget gives you the best chance to utilize the financial resources you have to grow your business. While this process will take some time and effort, it will provide a solid return on your investment.